Considering a company Purchase of Own Shares?
Our Virtual Tax Partner® tool can be used to work out whether you can meet the Substantial Reduction and Connection tests in respect of your share disposal.
- Meeting these two tests are an essential step in the own share purchase process, if you wish to claim CGT treatment on your POS.
The two tests can be tricky to meet if you are planning a buy-back in stages or via a phased buy-back and the tool aims to simplify the calculations for you.
The good news is that this tool is FREE with a subscription to www.rossmartin.co.uk
Information required to use the tool
- You will need to include the shareholdings of your connected parties, i.e. a spouse and your children (if under 18).
- Enter the nominal values of your shares and the total nominal value of share capital of the company, plus the number of shares that you intend the company to purchase.
It is also advised to use our Purchase of Own Shares Masterclass when you plan your transaction as this explains the formalities and Companies Act rules too.
Warning: this tool considers share capital but not loan relationships. If you have an ongoing loan relationship with the company you will need to consider also whether that fact will also breach the conditions of the Connection test. See Purchase of Own Shares for more detail.